Initial losses, corporate governance and earnings management

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dc.contributor.advisor Donnelly, Raymond en Mulcahy, Mark Brendan 2013-10-03T16:26:05Z 2013-10-03T16:26:05Z 2013 2013
dc.identifier.citation Mulcahy, M.B. 2013. Initial losses, corporate governance and earnings management. PhD Thesis, University College Cork. en
dc.identifier.endpage 340
dc.description.abstract This thesis examines the relationship between initial loss events and the corporate governance and earnings management behaviour of these firms. This is done using four years of corporate governance information spanning the report of an initial loss for companies listed on the UK Stock Exchange. An industry- and sizematched control sample is used in a difference-in-difference analysis to isolate the impact of the initial loss event during the period. It is reported that, in general, an initial loss motivates an improvement in corporate governance in those loss firms where a relative weakness existed prior to the loss and that these changes mainly occur before the initial loss is announced. Firms with stronger (i.e. better quality) corporate governance have less need to alter it in response to the loss. It is also reported that initial loss firms use positive abnormal accruals in the year before the loss in an attempt to defer/avoid the loss — the weaker corporate governance the more likely is it that loss firms manage earnings in this manner. Abnormal accruals are also found to be predictive of an initial loss and when used as a conditioning variable, the quality of corporate governance is an important mitigating factor in this regard. Once the loss is reported, loss firms unwind these abnormal accruals although no evidence of big-bath behaviour is found. The extent to which these abnormal accruals are subsequently unwound are also found to be a function of both the quality of corporate governance as well as the severity of the initial loss. en
dc.format.mimetype application/pdf en
dc.language.iso en en
dc.publisher University College Cork en
dc.rights © 2013, Mark B. Mulcahy en
dc.rights.uri en
dc.subject Losses en
dc.subject Earnings management en
dc.subject Difference-in-differences en
dc.subject.lcsh Corporate governance en
dc.subject.lcsh Accrual basis accounting--Great Britain en
dc.subject.lcsh Financial Management. en
dc.title Initial losses, corporate governance and earnings management en
dc.type Doctoral thesis en
dc.type.qualificationlevel Doctoral en
dc.type.qualificationname PhD (Commerce) en
dc.internal.availability Full text available en No embargo required en
dc.description.version Accepted Version
dc.description.status Not peer reviewed en Accounting and Finance en
dc.check.type No Embargo Required
dc.check.reason No embargo required en
dc.check.opt-out No en
dc.thesis.opt-out false
dc.check.embargoformat Not applicable en
dc.internal.conferring Autumn Conferring 2013 en

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© 2013, Mark B. Mulcahy Except where otherwise noted, this item's license is described as © 2013, Mark B. Mulcahy
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